Corporations, Entrepreneurs and growth in the Danish Food Cluster

STRATEGIC PARTNERSHIPS FOR INNOVATION

GLENDA NAPIER, HEAD OF ANALYSIS

Today’s content

• Background for strategic partnerships

• Findings in the Danish Food Cluster

• Concluding remarks

Background for strategic partnerships

• Denmark is the most innovative agri-food country in Europe (Renwick, 2014)

• Agri-food amounted 25 % of export in 2013 • Agriculture superpower (The Economist, 2014) • Highly specialized cluster (REG X, 2013)

BUT IN ORDER TO SECURE NEW GROWTH • More innovation to increase earnings in the sector • Start-ups and entrepreneurs need to learn to scale

their businesses • Large corporations need to become more innovative

PREVIOUSLY: firms generally innovated through acquisition

= innovation

= innovation

TODAY: firms increasingly collaborate to obtain innovation

Open Innovation (OI)

“Open innovation is the use of purposive

inflows and outflows of knowledge to

accelerate internal innovation, and expand the markets for external use of innovation, respectively.

Chesbourough, 2006.

Various OI partners

• Universities and research institutions

• Suppliers

• Customers

• Competitors

• Other firms as innovation agents i.e. start-ups and established firms

DAVID MEETS GOLIATH

Large company Entrepreneur

They don’t realize that we could develop a better product for half the cost and half the time

Working with large firms

takes a lot of bureaucracy

They ignore the fact that we have IP to protect

They waste our time before they are ready to

partner.

We can’t afford this to end up in a

law suit. We have external

regulations and internal policies

to follow

Increasing # partnerships between firms in the food sector

Source: Omta et al, 2014.

Large food companies are opening up..

• Nestle: ”Sharing is Winning”, 2005

• General Mills: ”G-Win Competition”, 2010

• Tate & Lyle: ”Open Innovation Team”, 2013

• DSM: ”Innovation Partnering Conference”, 2014

They say..

Nestle:

“These partnerships are created in order to solve a problem, fill in a gap or find an answer more effectively and quickly”

General Mills:

“Our collaborations go far beyond, ‘Can we run our product on your line?’ Instead, we look for true innovators who are willing to partner with us beyond production to build our brands and mutually benefit our businesses.”

Findings in the Danish Food Cluster

”We have contributed to the ”killing” of innovation, now it is our task to help fertilize it again in order to stay competitive”

”We need innovation to survive, and therefore we are looking for new ways to become more innovative”

”Our growth will depend on our ability to innovate – and we cannot do it alone”

(Quotes from companies in the Danish Food Cluster, interviews 2014)

DAVID MEETS GOLIATH IN DENMARK ..

Examples of ‘David and Goliath’ in the Danish Food Cluster

• Growers Cup & Dansk Supermarked

• Genoscan & Friland

• Stenalt Gods & Easyfood

• Simitci & Dansk Supermarked

• Blue Workforce & Danish Crown

• Webstech & Kongskilde

• ISI & Arla

Growers Cup & Dansk Supermarked (DS)

• In 2014, the strategic collaboration started

• Focus on developing new ‘go to market strategies’

• DS was looking for new products

• Opens up a ”playground” in a Bilka

• Growers Cup attends the playground for 1 week

• Initiates sales of ”Growers Cup” in DS warehouses

Genoscan & Friland

• In 2012, the strategic collaboration started

• Focus on adapting an existing technology to a new market

• Friland needed a method to ensure the quality of their meat in

• Genoscan has a technology, that needs to be developed further to fit Friland’s need

• Genoscan is ready to sell the product to Friland farmers today

Stenalt Gods & Easyfood

• In 2011, the strategic collaboration started

• Focus on developing something new together

• They co-developed a new sort of bio-flour

• It has been developed based on a new kind of corn at Stenalt Gods

• Today sold as organic focaccia roll.

Some overall reflections

• Focus on efficiency has reduced innovation efforts, but focus is changing now

• The strategic partnerships have resulted in some economic growth for the involved firms as well as ”open doors”.

• Most of the strategic collaborations were facilitated by a third partner

Mindset and culture

Defining strategic areas

Strategy and growth scenarios

Join a camp

Point of entrance

Screening Facilitation Meeting place

Matchmaking

Negotiation and contracts

Feedback

Engagement

Monthly collaboration and meetings

Application

PREPARATION

ALIG

N EX

PEC

TATIO

NS

Facilitator

Large firm Entrepreneur

Broker, screening,

connecting, matchmaking,

mentoring

Innovation agents, state-of-art knowledge

and technology, flexible

Experience, market, network, volume and

resources

Cluster

Collaborations Ecosystem

The bigger picture

Concluding remarks

Concluding remarks

• Strategic partnerships can be useful for firm innovation and growth in the food sector – and beyond

• Entrepreneurs can be innovation agents for large corporations

• But it requires risk-taking, time and change of mindsets in both the entrepreneurs and large firms

• Various types of facilitators can be useful – particularly in the early stages when firms are still learning to do “strategic partnerships”.

Final report and models in December 2014.

We will also help implement and initiate

strategic partnerships in 2015.

Contact info: glenda@regx.dk as well as partner organisations in the room